TMI Blog2021 (10) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... istrator but it has also informed that it intends to shortly initiate the process of corporate insolvency resolution of respondent Nos.2 and 3 under the Insolvency and Bankruptcy Code, 2016 and more particularly under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would apply to the NCLT for appointing the administrator as the insolvency resolution professional. The present is not a fit case where for invocation of extra ordinary jurisdiction under Article 226 of the Constitution of India. The contention made on behalf of the petitioner that there is no proximate cause for issuance of the impugned order, cannot be agreed upon. As a matter of fact there need not be any proximate cause for an action like the impugned one - petition dismissed. - WRIT PETITION (L) NO.22872 OF 2021 - - - Dated:- 7-10-2021 - UJJAL BHUYAN MADHAV J. JAMDAR, JJ. Mr. Janak Dwarkadas, Senior Advocate with Mr. Ameet Naik, Mr. Chirag Kamdar, Mr. Abhishek Kale and Mr. Deepak Deshmukh i/b. Naik Naik and Company for Petitioners. Mr. Ravi Kadam, Senior Advocate a/w. Mr. Venkatesh Dhond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors and appointment of administrator. Referring to the press release dated 04.10.2021, he submits that on 18th and 19th June, 2021, respondent No.2 had informed respondent No.1 that it had received nonbinding term sheets from Makara Capital, Singapore and Arena Investment for investment proposal worth ₹ 2200 crores and ₹ 2000 crores respectively. Respondent No.2 had approached respondent No.1 for in principle approval of such investment. The sudden impugned decision and the related threat of approaching NCLT for initiating corporate insolvency resolution process would jeopardize not only such investment proposals but the very future of the two NBFCs. Referring to the Covid-19 situation and the restrictions imposed on NBFCs by Reserve Bank of India, he submits that on the one hand NBFCs were required to pay principal and interest to the lending bank which is the UCO Bank in this case but restrained from recovering the same from the operators. In the circumstances, he submits that the impugned action is totally unfair and unjust and requires interference. 7. On the other hand Mr. Ravi Kadam, learned senior counsel submits that this is not a case where even filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of bank borrowings and market borrowings, which reveals serious concerns about the conduct of the affairs of the company. 4. Taking into account the defaults committed by SIFL in meeting various repayment obligations and concerns emanating from the inspection/special audit conducted by the Reserve Bank, in exercise of the powers conferred by Section 45-IE of the Reserve Bank of India Act, 1934, the Reserve Bank of India, hereby supersedes the Board of Directors of SIFL and appoints Shri Rajneesh Sharma as its Administrator with immediate effect. The major supervisory concerns constituting the basis of the supersession of the Board of Directors are given in Annex. (Jayant Kumar Dash) Executive Director Annex The major reasons for supersession of Board of Directors are as follows:- i. As per data submitted by financial institutions, the total borrowings of SIFL stood at ₹ 11,746 crore, on June 30, 2021. SIFL has defaulted with 12 lenders aggregating ₹ 3,566 crore. ii. The Board of Directors of SIFL and Srei Equipment Finance Limited (SEFL) had on July 04, 2019 approved transfer of assets and liabilities (including liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the annexure appended to the impugned order dated 01.10.2021. While the total borrowings of respondent No.2 stood at ₹ 11,476 crores as on 30.06.2021, it has defaulted with 12 lenders aggregating ₹ 3,566 crores. Board of Directors of both respondent Nos.2 and 3 had on 04.07.2019 approved transfer of assets and liabilities of respondent No.2 by way of slump exchange to respondent No.3 with effect from 01.10.2019. However, despite non-receipt of no objection certificate from majority of the lending institutions, respondent Nos.2 and 3 had given effect to the slump exchange. Respondent No.2 did not maintain minimum regulatory CRAR and NOF. Infrastructure loans as a percentage of total assets was assessed at 3.33% as against the regulatory requirement of 75%. Special audit conducted by Reserve Bank of India during December, 2020 and January, 2021 revealed that funds disbursed to certain borrowers were received back from such borrowers either on the same date or on dates close to the date of disbursement which indicated evergreening. Despite continuous engagement and follow up by Reserve Bank of India, respondent No.2 has failed to take corrective steps and remained no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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